Employees work at the headquarters of security systems developer Staqu Technologies in Gurgaon, India.
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India is facing a youth unemployment problem. The reduction of white-collar jobs in the information technology industry has left many fresh graduates and young people unemployed.
Between October and December last year, the unemployment rate among young people aged 20 to 24 in India rose to 44.49% from 43.65% in the previous quarter. Data from the Center for Monitoring Indian Economy showed that the unemployment rate among people aged 25 to 29 rose to 14.33% from 13.35% in the previous quarter during the same period.
The world’s most populous country also has the world’s largest youth population, with 43.3 million university enrollments in the fiscal year ending March 2022, According to the latest government data.
“We’re seeing the economy continue to grow at a high pace, but I don’t think employment is keeping pace,” said Chandra Garisa, CEO of recruitment firm Foundit. He explained that white-collar job opportunities, especially in the IT industry, are Job opportunities have been declining.
“One of the biggest industries hiring white-collar workers is IT and services, where hiring has slowed significantly,” he told CNBC.
As the adoption of automation and artificial intelligence gathers pace, many roles in IT are becoming redundant – a phenomenon that is not limited to India.
“Previously, the vast majority of college graduates were hired for basic skills, but now those basic skills are being taken care of by technology,” Garissa noted.
Data from Foundit shows that online hiring in IT hardware and software departments fell by 18% last year since 2022. Of the 14 industries in the study, the IT sector saw the largest decline in hiring activity. The total number of job postings for 2023 is also down 5% from the previous year.
“There is a mismatch between supply and demand for job opportunities, which is becoming a larger social issue in India,” Suyash Rai, deputy director and fellow at Carnegie India, told CNBC.
The IT industry is expected to employ 5.4 million people in the fiscal year ending March 2023, According to the Ministry of Electronics and Information Technology.
Skills mismatch
Another reason for youth unemployment in India is a “temporary skills mismatch” as many students have skills in the IT industry, but job creation occurs in manufacturing,” Garissa said.
He added: “Two big things are creating a skills mismatch: shifts in demand across industries that are opening up more opportunities, and advances in technology that are making basic skills irrelevant.”
Foundit data shows that manufacturing job openings increased 6% in February from the previous month, while IT job postings fell 9%.
“The industries that have traditionally hired in the past are different from the industries that are growing and hiring now,” Garissa said. “The requirements for recent graduates are very different now than they were five years ago, or even two years ago.”
For example, according to Foundit, the number of manufacturing jobs requiring artificial intelligence skills increased by 21% last year, up from 8% in 2022, with the highest growth among data analysts and junior technical software engineers.
Garisa stressed that young people still view careers in manufacturing as inferior to those in the IT industry, meaning some candidates may not be able to take advantage of emerging new jobs.
“That’s changing, but more needs to change for graduating college graduates to truly see these as quality career opportunities.”
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